Prospecting for Hidden Treasure: Finding Gold in Your Planned Gift Prospect Pool


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• Surveys say that the average planned gift is 200 times larger than a person’s average annual gift and statistics indicate that most major-sized gifts are made through end-of-life instruments rather than through current-giving methods. Yet, the majority of planned gift donors are often overlooked by development offices simply because they are masquerading as annual fund donors. However, based on their gift potential, a well-structured proactive investigation for planned gift prospects should be part of your prospecting strategy. This session begins with a detailed discussion on understanding the most common planned giving donor profiles and then continues with step-by-step actions to help you identify the best prospects at your organization. Join us for this enlightening journey into the world of the hidden major donor!

Presentation conceived, researched, written and delivered by Katherine Swank, J.D. (May 2014)

Published in: Economy & Finance, Business
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Prospecting for Hidden Treasure: Finding Gold in Your Planned Gift Prospect Pool

  1. 1. 4/30/2014 Footer 1 PROSPECTING FOR HIDDEN TREASURE FINDING GOLD IN YOUR PLANNED GIFT PROSPECT POOL Katherine Swank, J.D. Senior Consultant, Target Analytics®, a Blackbaud Company Presentation with active hyperlinks available @
  2. 2. © Blackbaud 2014 22 Name Katherine Swank, J.D. Title Senior Fundraising Consultant Target Analytics Development Background • Health, Public Broadcasting, Higher Education • Raised over $200 million Interesting Facts • Past president, Colorado Planned Giving Roundtable • Affiliate faculty, Regis University’s Masters in Global Nonprofit Leadership program • Member, Partners for Philanthropic Planning Publications & Presentations: • fundraising blog • Creating a Legacy: Building a Planned Giving Program from the Ground Up @ • Presentations @ YOUR PRESENTER
  3. 3. © Blackbaud 2014 33 Where do Planned Gifts Fit in the Development Pyramid? • Prospect Pool, Average Gift Amount & Cost to Raise a Dollar Who Makes Planned Gifts? • Get to Know the Planned Gift Donor • Donors, Recipient Organizations and Other Facts • Trends in Planned Giving What Data is Useful for Planned Gift Programs? • Determine Your Full Prospect Pool • Apply the Data • Using Data to Report Planned Gift Revenue and Inventory • Take-Aways and Wrap-Up LET’S EXPLORE THESE QUESTIONS
  5. 5. © Blackbaud 2014 55 PLANNED GIVING IN YOUR DONOR PYRAMID You Have More Planned Gift Prospects than Major and Principal Gift Prospects Combined Principal Gift Prospects (<1%) Annual Gift Donors (90%) Major Gift Prospects (10%) Planned Gift Donors (30%)
  6. 6. © Blackbaud 2014 66 PLANNED GIVING IN YOUR REVENUE PYRAMID Principal Gifts ($50,000-$1,000,000) Annual Gifts ($1 - $1,000) Planned Gifts ($25,000-$150,000) Major Gifts ($1,000 - $100,000) Planned Gift Donors Have a Higher Average Gift Than Major Gift Donors
  7. 7. © Blackbaud 2014 77 PLANNED GIVING COST IN YOUR BUDGET PYRAMID Planned Gifts (3¢ - 10¢) Special Events/Acquisition (50¢/$1.25) Principal and Major Gifts (5¢ - 10¢) Renewed Annual Gifts (20¢) Planned Gifts Cost Less to Raise a Dollar than Other Development Efforts
  8. 8. © Blackbaud 2014 88 WHO MAKES PLANNED GIFTS?
  9. 9. © Blackbaud 2014 99 PLANNED GIFT DONORS Who Really Makes Planned Gifts? • 1:10 of current donors • 2:3 have no offspring or no grandchildren • Educated, especially graduate degrees • Household incomes >= $200,000 • Estates >= $1,000,000 - Excluding the primary residence • Make total charitable gifts of > $500 annually • Volunteer • Surviving spouse of married couple and single women; but rarely single men When Do They Make Them? • 1:10 donors makes planned gift between ages 50-79 • 2:10 donors makes planned gift > age 80
  10. 10. © Blackbaud 2014 1010 PLANNED GIFT RECIPIENTS Who Receives Planned Gifts? Indescendingorderof preference • Local charities that provide basic needs • Education • Arts • Health • Religion • Youth and Family • Environment/Animal Care • International Indescendingorderof giftamount • Education • Religion • Arts • Health • Basic Needs • Youth and Family • International • Environment/Animal Care
  11. 11. © Blackbaud 2014 1111 PLANNED GIFT FACTS What Planned Gift Vehicles are Popular with the Affluent? • In descending order of use: - Will or Trust with Charitable Provision - Endowment Fund - Charitable Remainder Trust or Lead Trust - Private Foundation - Community Foundation Donor-Advised Fund or Bank Donor-Advised Fund - Charitable Gift Annuity What Do They Fund? • In descending order of donor-directed use: - General Operating Support - Long-term Investment in the Organization - Support the Growth of the Organization - Fund a Particular Program - Memorial Gift
  12. 12. © Blackbaud 2014 1212 PLANNED GIFT FACTS Who Makes the Largest Planned Gifts? • Estates > $5,000,000 give around 27% of their value to charity • Estates > $20,000,000 give around 40% of their value to charity When Do You Get That Planned Gift Revenue? • Decedents aged 80+ - 80% of estate gift dollars are received after donors turn 80 - Though, those who begin estate planning by the age of 55 provide 40% of total deferred gift dollars eventually received 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95+ Charitable Bequest Dollars Received by Donor Age at Death
  13. 13. © Blackbaud 2014 1313 PLANNED GIFT TRENDS • Lowest birth rates for those currently 79 years old and older • Baby bust 1924-1932 (approximate ages 80-90) • Someone born in 1932 has a longer life expectancy than someone born in 1924 • We should have expected to have decreases in bequests in the past decade The Bad News is…….. Some of Us Aren’t Dying to Participate
  14. 14. © Blackbaud 2014 1414 PLANNED GIFT TRENDS • Childlessness is the single strongest demographic predictor of including a charitable bequest in one’s estate plan • Rate of childlessness for those 70+ will double over time • Will occur at the same time we have a sustained rise in total population • Most dramatic increases in actual dollars received by charities may not be seen for five years or longer The Good News is…… Some of Us Aren’t Having Sex
  15. 15. © Blackbaud 2014 1515 PLANNED GIFT TRENDS • Higher levels of education are associated with higher levels of charitable bequest giving • Steep growth in education levels in the 55+ age population since 1970 • Means an increasing propensity to engage in charitable estate planning ‘Geek’ is the New Black
  16. 16. © Blackbaud 2014 1616 PLANNED GIFT TRENDS • Increasing trend to include a charity as a legacy beneficiary among the U.S. population of adults aged 55 with a will or trust • Between 1998 – 2008, including a charitable bequest grew by almost one fourth, from 8.28% to 10.12% Younger Is the New Old… Proactively Identify a Younger Pool of Prospects
  17. 17. © Blackbaud 2014 1717 PLANNED GIFT TRENDS • The generally positive trend in charitable planning among the 55+ is driven by the youngest demographic, ages 55-64 • In comparison, the 65-74 year olds are relatively flat and the 75+ group is declining in their estate planning activity • Positive trends will eventually develop as the 55-64 year olds move into older age categories • But that’s 10+ years away Older is Not Necessarily Better… Share These Trends to Educate Your Team and Leaders
  18. 18. © Blackbaud 2014 1818 PLANNED GIFT TRENDS • Steadily increasing levels of charitable giving and volunteering for population aged 55+ • Charitable engagement is a positive indicator of the propensity to leave a charitable bequest Set The Alarm Clock for ‘Early’… Pass Along More Qualified Prospects for Engagement
  19. 19. © Blackbaud 2014 1919 ROLE OF PROSPECT RESEARCH & DATA ANALYTICS Research and Analytics Lead the Development Office Effort • Identify the organization’s best pool of potential prospects - Ascertain who’s likely to have already made a planned gift - Surface those that should be educated about planned gifts to your organization - Segment top prospects who should be approached on an individual level • Research top prospects to determine their potential capacity for a planned gift - This might also be in conjunction with a current major or principal gift ask • Suggest the gift type or types most appropriate for solicitation of a specific prospect
  20. 20. © Blackbaud 2014 2020 WHAT DATA IS USEFUL FOR PLANNED GIFT PROGRAMS?
  21. 21. © Blackbaud 2014 2121 PRIMER ON PLANNED GIFT VEHICLES • Provision in your will or trust to pass money or other items to a charitable organization upon your death • Wills are often the first estate planning tool • 90-95% of planned gifts are currently made this way • Two primary age groups • Late 40s to late 50s • Mid 60s to late 70s • About 75% of wills are never changed or updated • More than two-thirds of planned gift donors also make current annual gifts • Planned gift donors are significantly more philanthropic than non-planned gift donors Bequests
  22. 22. © Blackbaud 2014 2222 PRIMER ON PLANNED GIFT VEHICLES • An irrevocable contract between one or two donors and your organization. • In exchange for making a gift to your organization, you promise to pay the donor(s) a fixed amount regularly for life • 5%-6% of all planned gifts are CGAs • Primary age group is mid 70s and older • Average annuity is $60,000 • Over 4 in 5 annuitants learned about gift annuities through the organization’s own marketing and promotion – you can help the gift officers know who to approach • Many gift annuitants do multiple annuities Charitable Gift Annuities
  23. 23. © Blackbaud 2014 2323 PRIMER ON PLANNED GIFT VEHICLES • An irrevocable financial holding that moves liquid or illiquid assets out of an individual’s possession into a giving vehicle with charitable intent. • The trust pays a specified annual amount to one or more people for a fixed number of years, or for the life of the individual(s) who benefit from the trust’s distributions • At the end of the term, the remaining trust property is distributed to your organization and any other specified charities • 1%-2% of all planned gifts are CRTs • Primary age group is mid 50s - early 70s • Many CRT holders make charitable bequests as well Charitable remainder trusts
  24. 24. © Blackbaud 2014 2424 PRIMER ON PLANNED GIFT VEHICLES • Written provision in your life insurance policy, bank account, retirement funds account and the like that pass money or other items to a charitable organization upon your death • Are becoming very popular with donors age 60 and younger • These gifts cost no money to set up, do not require an attorney or financial planner to be involved • Can make gifts such as these in more than one instrument • Recent graduates, older alumni and grateful patients, Board members and Trustees, organizational insiders such as staff, faculty, physicians, etc. can make these beneficiary designation gifts in minutes! Beneficiary Designation Gifts
  25. 25. © Blackbaud 2014 2525 3rd Party Vendor Hire a company that knows and creates planned gift-specific donor models Saves staff time and reduces time to identify prospect pool Donor models can be customized to specific gift vehicles Your Own Modeling You know your data Takes an extraordinary amount of time and understanding of analytic modeling process Lack of robust outside data may cause endogeneity concerns Data Appends Basic data is abundant Takes time to collect on your own and may not be robust enough; consider purchasing data Data points are generic in their identification and not specific to your prospect pool WHICH METHOD OF USING DATA IS RIGHT FOR YOU?
  26. 26. © Blackbaud 2014 2626 DATA YOU’LL WANT TO HAVE • If you can only collect or purchase up to 4 data points: - Age - Household Income - Known Public-Record Assets Range (no need to have exact $$ at this stage) - Education Level/Degree • Up to 8 data points: - Marital Status - Number of Children in the Home - Yearly amount of charitable gifts to other organizations or philanthropic indicator flag - Planned gift acknowledgement with another organization • If you can collect this information from each individual: - Volunteerism - Planned gift already completed that includes your organization Regardless of Where or From Whom Planned Gift Profile Models Originate
  27. 27. © Blackbaud 2014 2727 APPLY THE DATA – EASY • Use data to find everyone in your CRM system with the following: - Over the age of 50 - Household income of $50,000 or higher - Known assets of $1,000,000 or higher - College degree • Rank your prospects by the following, in descending order in all categories: - College degree - Then by age - Then by known assets / asset range - Then by income • Gift annuitants are typically over 70 years old and have incomes of $50,000 or higher • CRT and LT grantors are typically 50-69 and have assets above $2.5 million • The most active ages for creating bequests in estate plans are 40-59 • Those ready to share their estate plans with you are 80+ Use Data Points to Segment and Prioritize for Marketing
  28. 28. © Blackbaud 2014 2828 APPLY THE DATA – EASY • Use data to find everyone in your CRM system with the following: - Over the age of 50 - Household income of $200,000 or higher - Known assets of $5,000,000 or higher • Rank your prospects by the following, in descending order in all categories: - Known assets / asset range - Then by age - Then by income • Assign for Gift Annuities: Age 75-90 with incomes of $75,000+ • Assign for CRT and LT: Age 50-69 and have assets above $5 million • Provide research and recommendations for possible planned gifts on all principal gift prospects and major gift prospects already validated for a potential gift of $100,000 or higher or any prospect with assets of $10,000,000 or higher Use Data Points to Segment and Prioritize for Gift Officer Assignment
  29. 29. © Blackbaud 2014 2929 APPLY THE DATA – SOPHISTICATED • Append as many of the suggested data points as possible to everyone in your CRM system • NOTE: Analytic model-vendors use hundreds of additional data points related to financial and consumer habits, wealth and specific asset classes, biographical and socio-biographical information – the suggested data points in this presentation are not exhaustive • In addition to gift information, other useful affiliation codes specific to your organization might include (this list is not exhaustive): - Events attended - Subscription or member levels - Committees or other leadership affiliations - Patient status or family of patient status - Connection to disease or no connection - Clubs, auxiliaries, extensions and group membership - Use a self-validating model process to specifically identify your organization’s unique planned gift donor profile, if possible - Alternative, speak with a vendor about the data points you have available to determine if you should work together to create a custom model for your organization Use Data Points to Build or Purchase Analytic Models
  30. 30. © Blackbaud 2014 3030 USE DATA AS A VISUAL AIDE TO REPORTING $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 Annual Revenue $14 Million 19% $14 Million 68 Gifts 18% $48 Million 17 Gifts 63% Gifts of $1 Million + Gifts of $100,000 + All Other Gifts 60% of major gifts over $100K were current major gifts; 40% were deferred planned gifts Show the Value of Planned Gifts in the Development Pyramid
  31. 31. © Blackbaud 2014 3131 USE DATA TO EDUCATE AND INFORM LEADERS 50% 20% 1% 1% 6% 18% 4% Planned Giving Inventory Known Expectancies Open Estates Life Insurance Policies Life Estates Testamentary Pledges Charitable Remainder Trusts Gift Annuities Provide Graphically Vivid Reports to Easily Convey Planned Gift Information
  32. 32. © Blackbaud 2014 3232 OVERVIEW & TAKE-AWAYS • Specific types of people are the most likely to make planned gifts • The busiest people in estate planning are in their 40s and 50s • However, most charitable bequest dollars realized come from those who die in their 80s • Estate planning is changing and will continue to change • Use of bequests in wills is declining; while bequests through life insurance proceeds, retirement funds and other financial cash reserve accounts in increasing • Short-term planned giving trends appear rather negative, but……. • Future trends in planned giving are positive for the following 25 years • Invest time and donor-contact, have patience and the result will change your organization!
  33. 33. © Blackbaud 2014 3333 QUESTIONS AND CONTACT Thank You! For a list of resources related to this presentation, please contact me: Katherine Swank, J.D. 843-670-7278 (located in Denver, CO) Twitter: @KatherineSwank LinkedIn: SlideShare: